US ethylene margins rise as higher spot prices offset feed gain

HOUSTON (ICIS)--?xml:namespace>USethylene margins rose in the third week of March, as higher spot prices offset a jump in feedstock ethane costs, the ICIS margin report showed on Monday.

Ethylene spot margins were at 27.53 cents/lb ($607/tonne, €425/tonne) in the week ended 18 March, up by 3.1% from 26.71 cents/lb one week earlier.

The increase came as spot ethylene for March traded last week at 54.75-58.00 cents/lb, rising from 53.75-54.00 cents/lb in the week ended 11 March.

Market participants pointed to firm demand, citing strong polymer exports as the reason behind the uptrend in the monomer.

Global demand will probably continue to drive exports from the US, a source said, adding that demand for ethylene into derivatives in the US Gulf also remained strong, particularly for styrene, ethylene dichloride (EDC) and mono ethylene glycol (MEG).

Other sources pointed to looming polymer shortages in Asia, saying Chinese demand remained strong, while predicting that the US would likely fill the gap from lost production in Japan.

Spot ethylene also got a lift from higher ethane prices.

Ethane began last week trading at 65.25-66.50 cents/gal, but by Friday the feedstock was priced in a range of 74.00-76.00 cents/gal.

The jump could be the result of tight supply and firm demand for light feeds because cracking economics continue to be good, a source said.

Ethylene bid/offers for March were wide apart on Monday at 54.00-59.00 cents/lb.